Italian pension spending
remains high and there are "areas" where it could be cut, an
International Monetary Fund working paper said Monday.
Pension spending is still high despite reforms including the
controversial Fornero law in 2011, which kept Italy on the
international fiscal rails, said the paper by Michael Andrle,
Shafik Hebous, Alvar Kangur and Mehdi Raissi entitled 'Italy:
toward a growth-friendly fiscal reform'.
The study said there were "many areas" where Italy could act
to bring down pension spending and cut the budget deficit and
public debt, the second-biggest in the eurozone after Greece's.
Populist parties that won the recent Italian general election
have vowed to scrap the Fornero reform in moves that would raise
pension spending, experts say.
One of the moves to cut spending, the paper said, would be to
scrap the 14th monthly payment and reduce the 13th monthly
payment in wage packets, which could be replaced by anti-poverty
measures.
Then, there could be new limits on the age of widowed spouses
or orphans.
"The enactment of measures that guarantee short-term savings
and also ensure them in the medium term should be considered,"
the paper said, highlighting the difference between
social-security contributions of payrolled workers, which are
33%, and the self-employed which are t 24%. The latter should be
raised, it said "to at least 27%.
High pension spending means there is less money available
for sectors like education, the paper said.
Te adoption of pro-growth and a mixture of more inclusive
spending measures "will probably require a rationalisation" of
social spending, especially on pensions, said the IMF working
paper.
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